Comments on: Golden ticket economics, part 1: Next restauranthttp://blogs.reuters.com/felix-salmon/2012/01/06/golden-ticket-economics-part-1-next-restaurant/
A slice of lime in the sodaSun, 26 Oct 2014 19:05:02 +0000hourly1http://wordpress.org/?v=3.8.3By: nickkokonashttp://blogs.reuters.com/felix-salmon/2012/01/06/golden-ticket-economics-part-1-next-restaurant/comment-page-1/#comment-34819
Sat, 07 Jan 2012 20:23:23 +0000http://blogs.reuters.com/felix-salmon/?p=11762#comment-348191. Enterprising coders did set up scripts — but those have been effectively blocked by both passive (captcha) and active (ip filtering) means.

2. I don’t believe a ‘ticket’ has ever sold for $ 3,000 — a TABLE has sold for $ 3,000. That table was a kitchen table for 6 people that with wine pairings, service, and tax was nearly $ 2,500 face value. This was a case where one blogger got it wrong and EVERY news source since has reported it as if a $ 100 ticket sold for $ 3,000. Big difference.

3. The number of scalped tickets is very low… we can track transfers and to an extent which are scalped and it is less than 1 %. The majority of transfers that are not between family and friends are processed through our site — a few per day only.

4. Most economists I have spoken with on this (and yes, they do call / email me) fail to consider the fact that we have to tightly control the flow of people into the restaurant and that we are not making widgets… it is not a scalable operation. Those that realize this immediately think — raise prices and find price stability through an auction. I completely understand that from the point of view of maximizing utility (in the economic sense). But it would be a PR / customer service DISASTER. Right now we are offering an experience that is perceived as a great value and that ensures that we have a full house every night. As soon as we take that to ‘parity’ we run the risk of living a bright but short existence. We are planning for the long term — and that includes tangential businesses (our iBook series with Apple for example) that are not factored into their plans.

5. For our El Bulli menu we will be running a Dutch Auction for 1 table of 2 per night… with 100% of the proceeds benefiting the University of Chicago Cancer Center where chef Achatz was treated. We will indeed see where El Bulli pricing settles, albeit for charity and for a very limited supply.

6. I am in the process of building a software suite that will allow restaurants, galleries, barbers, theaters, etc. charge variable pricing in both direction… and indeed use systems to easily sell fixed, variable, and auction pricing in a mix based on both supply and demand — while linking through social media seamlessly… and without having to use third-party deal sites to interact with opt-in customers. Next is in the first iteration of that experiment — there is plenty more (and more interesting) models to come.

Your point about endowment effects and expectations/framing/anchoring are well taken. However, over time, isn’t the equilibrium solution a small number of dedicated arbitrageurs (“scalpers” in the vernacular) who buy in the primary and sell in the secondary market? Their facebook page notes that entire days’ allocations are selling out at 3 second clips. An enterprising coder could just set up a script that buys em all and sells at a profit.

Doesn’t it make more sense for the restaurant to capture this surplus rather than a parasitic middleman?

Here we have a couple of reasons why the dynamic is favorable to a Dutch auction: an extremely limited supply (relative to, say, a sports event or concert), and a convenient, low transaction cost method of running the auction (the web, electronic payment systems, edocs, etc.)